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Business Opportunities - Why Pre-Packaged BizOpps are Not Worth

Article:

Pick up any "business opportunity" magazine at the local

newsstand, and you'll see a glossy, attractive publication

designed to attract people who are actively seeking ways to earn

extra money, buy a franchise, or open a business of their own.

After all, it's the American Dream to own your own business and

get rich, right?

You've probably heard the old saying, "Most people are too busy

earning a living to make any money." Common sense tells us that

we're not going to get rich working for someone else (with the

possible exception of the lucky folks who started with Microsoft

or Google in their early days and got rich through stock

options). The average American employee lives from paycheck to

paycheck, with barely enough income to cover living expenses,

leaving nothing for investment toward building wealth for a

comfortable retirement. Hence the allure of the "Business

Opportunity."

As you flip through one of these "BizOpp" magazines, you'll see

a wide variety of advertisements for different types of

businesses, ranging from simple "starter kits" for around $29

all the way to sophisticated franchises costing $100,000 or

more. For most people, it's impossible to raise enough capital

to consider opening a true franchise. The franchise fees alone

are often prohibitive, running into tens of thousands of dollars

even for the lesser known businesses, or several hundred

thousand dollars for better known companies. And that's not even

including the outlay required to actually open the doors for

business.

At the other end of the scale, most people are aware that the

cheap starter kits and "business in a box" packages are

basically junk. But that leaves a whole host of medium-priced

business startup concepts, ranging in price from around $500 on

the low end to $10,000 on the upper end. I refer to these as

"pre-packaged business opportunities."

To explain why pre-packaged businesses are usually a waste of

time and money, I'll use windshield repair as an example. As I

write this, I'm looking at an ad for a training program that

costs $3,000, including starter materials. In case you don't

know what I'm referring to here, the basic idea is that small

chips, cracks, or holes in automobile windshields can be

repaired using a special liquid material that seals and repairs

defects. This is obviously much cheaper than replacing an entire

windshield. Hence the "opportunity" to start a business that

helps people save money on their windshield repairs.

Now, in case you're thinking, "There's no way I would want to be

in that business," please bear in mind that I'm just using this

as an example out of hundreds of possible different business

concepts advertised in the same fashion. And of course there are

many people who would be attracted to such a "business

opportunity" -- people who really like cars, people who already

know quite a bit about auto repair, and so on. Plenty of

individuals are attracted to a business idea like this, which is

why this particular "opportunity" has been around for decades.

Now, here's the real question. Can you seriously expect to shell

out $3,000 for some starter materials and training in the

windshield repair business, then put a sign out, and expect to

start earning money right away? Of course not! This is the #1

flaw with pre-packaged business opportunities: you still have to

figure out how to market the product or service on your own.

Let's take a closer look at the windshield repair business.

Let's say your goal is to make $50,000 per year in net income.

If we assume that you can charge around $50 per windshield

repair, at a material cost of around $10, then you have a gross

profit (not counting your labor) of $40 per repair. To make

$50,000 net, you'd need to find 1,250 windshields per year that

required fixing. That translates to more than 100 repairs per

month, and you'd need to keep this up month in and month out to

meet your income goal. That works out to 3-5 repairs per day,

depending on how many days per month you work.

Now, if you had 1,250 cars lined up down the road, all ready for

the repair work, it would be nice easy money, right? But FINDING

those 1,250 cars and then SELLING those 1,250 car owners on your

service will be the real problem. In other words, you don't

really have a windshield repair job here. You have a SALES job,

pure and simple. Most of your time will be spent finding

business. Obviously, finding one car at a time will be totally

impractical. Instead, you'll need fleet accounts with major car

dealerships, auto repair shops, car rental agencies, and so on.

And you can bet that a number of other people (some of whom

bought the same pre-packaged business that you did) have also

solicited the same companies for their windshield repair

business.

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So again, what you really have here is a sales job. If this were

a truly profitable business, then the company selling you the

"opportunity" would not be making all their money selling

pre-packaged businesses to people like yourself. Instead, they

would be making their money by rolling out the service across

the country and selling windshield repair directly to fleet

accounts on a nationwide basis. But they know that there is

actually more money to be made in the BizOpp world, preying on

people who have the dream of starting their own business.

The message here is that any pre-packaged business opportunity

that sells in the $500 to $10,000 range is typically worthless

and a complete waste of your time and money. Please bear in mind

that these numbers are just a guideline, and you must always

exercise good judgment when evaluating any business opportunity.

Just because a "hot" pre-packaged opportunity is selling for

more than $10,000 does not mean that it is necessarily

legitimate. Many rip-offs cost a lot more than that. But

generally speaking, the promoters of these schemes realize they

are aiming at people who can't pay a lot of money to get started

in business. So the packages are marketed in a way that will

maximize the number of people that can afford to buy in.

If you are serious about starting your own business, then a

pre-packaged opportunity is not the way to go. It might seem

like an easy answer to your problem, but the very fact that it's

being sold as a packaged business probably means that there's no

real money to be made without a long hard sales grind. You're

much better off doing your own research, coming up with your own

business ideas, and then testing your ideas with small

advertisements to see if your concepts have any real potential.

That's how many businesses get their start. You'll have a much

better chance of making it in the world of business or

self-employment if you ignore those BizOpp magazines entirely!

About the author:

Charles J. Phelan has been helping consumers become debt-free

without bankruptcy since 1997. A former sr. executive with one

of the nation's largest debt settlement firms, he is the author

of the Debt Elimination Success Seminar™, a five-hour audio-CD

course that teaches consumers how to choose between debt program

options based on their financial situation. The course focuses

on instruction in do-it-yourself debt negotiation. Visit

www.zipdebt.com